By Peter Nurse
Investing.com — Oil prices rose Friday, helped by weakness in the U.S. dollar, but are still on course for their lowest weekly close in seven months on concerns of sluggish economic growth and China’s COVID woes weighing on global demand.
By 09:20 ET (13:20 GMT), futures traded 2.8% higher at $85.91 a barrel, while the contract rose 2.9% to $91.72.
U.S. were down 2.3% at $2.4006 a gallon.
The U.S. dollar traded sharply lower Friday, correcting following a month-long rally after it failed to make new highs in response to hawkish comments on Thursday from Federal Reserve Chair Jerome Powell.
This weakness has taken the pressure off non-dollar-based importers around the world, given that the crude market, like the markets of many other commodities, is denominated in dollars.
That said, crude was still set for a second weekly decline as aggressive interest rate hikes and China’s COVID-19 curbs weighed on the demand outlook.
China, the largest importer of crude in the world, announced further restrictions on internal travel this week as it attempts to battle stubborn outbreaks of the virus.
Beijing is tightening travel restrictions for anyone entering or leaving the capital, ahead of next week’s Golden Week holiday, while Chengdu, the country’s sixth-largest city with 21 million people, remains in lockdown.
Consultancy Energy Aspects estimated that Chinese oil consumption could fall this year for the first time since 2002, by an average of 380,000 barrels a day.
This comes just a day after the hiked interest rates by a jumbo 75 basis points and with the expected to do something similar in just under a couple of weeks’ time – moves that are likely to hit economic growth, and thus oil demand, going forward.
Another negative was Thursday’s data from the that showed a large buildup of U.S. crude inventories of 8.8 million barrels last week, creating doubts about the strength of demand from the world’s largest consumer.
However, this build is likely to have been exaggerated by the government releasing crude stockpiles from the country’s Strategic Petroleum Reserve.
Also of interest is a meeting of European Union energy ministers, who are trying to come up with measures designed to bring down cripplingly high power and prices ahead of the coming winter.
Attention may also switch to any comments from members of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, after its move to cut output by 100,000 barrels a day last week had very little impact on the market.
“The more recent weakness in oil prices does increase the risk that we see some form of intervention from OPEC+,” said analysts at ING, in a note. “The group made it clear that further action could be taken if they felt it was necessary, and the market is likely trading towards levels where they are starting to get a bit uncomfortable.”
The rig count and the CFTC’s round off the week later.